Best Term Insurance Plans in India

Term Insurance Plans in India are best as they come with high risk coverage and low premiums and in case of unfortunate death of the life insured, the nominee would get sum assured. However identifying best term insurance plans in India may be difficult as your insurance agent may cheat you by just looking at his commissions and do not worry about its suitability for you. This article is based on request from Vikas and Seetharaman who requested on “Suggest-a-topic” to write about Best Term insurance plans in India.

Identification of best term insurance plans in India

Now the tricky part is about identifying the good term insurance plans in India. There are a few parameters which we have taken to identify them.

1) Settlement ratio: Settlement ratio plays a key role in identifying a good term insurance plan. Settlement ratio is nothing but the claims settled by an insurance company against the total settlements received. The higher settlement ratio is good for the company as claim rejection chances are very less from such insurance companies.

2) Enhanced Features: Though every term insurance program would possess its own features, any enhanced and additional features would be helpful for individuals looking for insurance.

3) Customer service: One more key point which I felt is to look for a term insurance plan where customer service of such insurance company is good. There is no point in choosing a term insurance and your family struggling to bring the claim accepted due to delay or poor response from the insurance company.

1) LIC Amulya Jeevan Term Insurance Plan: This is pure offline term insurance plan from LIC. Below are the features of this plan:

The claim settlement ratio of this company for FY 2011-12 is 97.4%

Sum assured would be paid to nominee in case of death of the life insured. No maturity benefit or survival benefit. No loans can be taken from such plans.

Minimum age : 18 years and Max is 60 years. Maximum age at maturity should be 70 years

Policy is available for 5 to 35 year term

Minimum sum assured: Rs 25 Lakhs and Max Sum assured – No limit

Exclusions: In case of suicide committed by insured before 1 year, no claim would be paid

Premium for Rs 1 Crore sum assured for a 30 year individual for the 30 year policy term: Rs 33,600 per annum

Though the premium looks high, I feel this is one of the best term insurance plans in India which one should consider.

2) ICICI I-Care Term Insurance Plan: This is a pure term insurance plan from ICICI which is available to buy online. Below are the features of this plan:

The claim settlement ratio of this company for FY 2011-12 is 96.5%

Sum assured would be paid to nominee in case of demise of the life insured. No maturity benefit or survival benefit. No loans can be taken from such plans.

I-Care option-II available with accidental death benefit feature equal to sum assured for maximum of Rs 50L with small extra premium. Means if you are taking Rs 50 L term insurance with accidental death benefit feature, your total sum assured would be Rs 1 Crore (Rs 50 L + Rs 50 L).

Minimum age : 18 years and Max is 65 years. Maximum age at maturity should be 75 years

Exclusions: In case of suicide committed by insured before 1 year, no claim would be paid

Premium for Rs 1 Crore sum assured for a 30 year individual for the 30 year policy term: I-care Rs 12,360 and with accidental death benefit feature it would be Rs 15,281

I feel this is one of the good term insurance plan in India which comes with an accidental death benefit rider where you can get the additional sum assured of Rs 50 Lakhs with small additional premium.

3) HDFC Click-2-Protect Term Insurance Plan: This is pure online term insurance plan from HDFC. Below are the features of this plan:

The claim settlement ratio of this company for FY 2011-12 is 96.2%

Sum assured would be paid to nominee in case of demise of the life insured. No maturity benefit or survival benefit. No loans can be taken from such plans.

Minimum age : 18 years and Max is 55 years. Maximum age at maturity should be 65 years

Policy is available for 10 to 30 year term

Minimum sum assured: Rs 10 Lakhs and Max Sum assured – 10 Crores

Low premiums for tobacco users

Premium for Rs 1 Crore sum assured for a 30 year individual for the 30 year policy term: Rs 10,200

I personally had a bad experience in reaching customer support for more than 45 days to consider this plan as I want to take some additional benefits which are available only offline. Few readers on this blog expressed that customer support is good for this insurance company.

If customer support is improved, no doubt this could be the best term insurance plan in India with high settlement ratio and low premium.

4) SBI Smart Shield Term Insurance Plan: This is pure offline term insurance plan from SBI Life. Below are the features of this plan:

The claim settlement ratio of this company for FY 2011-12 is 95.5%

Sum assured would be paid to nominee in case of death of the life insured. No maturity benefit or survival benefit. No loans can be taken from such plans.

Minimum age : 18 years and Max is 65 years. Maximum age at maturity should be 70 years

Policy is available for 5 to 30 year term

Minimum sum assured: Rs 25 Lakhs and Max Sum assured – No limit

Premium for Rs 1 Crore sum assured for a 30 year individual for the 30 year policy term: Rs 11,925

5) Kotak e-Preferred Term Insurance Plan: This is online term insurance plan from Kotak life. Below are the features of this plan:

The claim settlement ratio of this company for FY 2011-12 is 92.1%

Sum assured would be paid to nominee in case of demise of the life insured. No maturity benefit or survival benefit. No loans can be taken from such plans.

Minimum age : 18 years and Max is 65 years. Maximum age at maturity should be 70 years

Policy is available for 5 to 30 year term

Minimum sum assured: Rs 25 Lakhs and Max Sum assured – No limit

Premium for Rs 1 Crore sum assured for a 30 year individual for the 30 year policy term: Rs 12,921

Covers tobacco users with low premium

This policy available with step-up option and step-down option

Step-up option: When an individual is married or brought first house, sum assured can be increased by 50% with additional premiums. In case of birth of a child or during the policy anniversary of 1/3/5 years, 25% sum assured can be enhanced with additional premium. The additional premium payable would be 3% of the basic premium (before 15 years from policy date) and 5% of the basic premium (after 15 years from policy date).

Step-down option: Similarly in case you feel you do not need high sum insured, you can reduce it with step-down option with some terms and conditions.

Step-up and step-down option is a unique feature of Kotak e-Preferred Term insurance plan which is not available in major term insurance plans. These extra features make this as best term insurance plan in India comparing to others.

Kotak website indicates that critical illness riders are available. However all major companies have discontinued these riders w.e.f. 1-Oct-2013 as per IRDA guidelines, hence I am thinking that the info available on Kotak website is yet to be updated. The website still shows that these features are available.

hi,
your all analysis are really very good..i want to buy a term insurance plan for me, am 26 yrs old
i am bit confused that i should buy a term plan of 1 crore sum assured or 50 lakh sum assured as i am a regular investor in PPF, LIC FD and mutual funds so please let me know whether i should go for 50 lakh or 1 crore.

I am not sure why and quite surprised that LIC’s plan has been included in this article. I think this is a gross mismatch here and can’t be called one of the best term plans for these reasons:
1. This is only available offline – this is by far the biggest drawback of this plan. It is a known fact that LIC has been under pressure from its agents/unions etc. not to launch on-line term plan because their business would be directly impacted. And the worse thing is that LIC has succumbed to such pressure thus depriving customers a very good option. Even if it is true that some agents might leave LIC if it does go ahead with an on-line option, I am sure it would still have enough agents to do business. It is sad that the largest insurer in the country doesn’t have an on-line plan yet months and years after upstarts have launched it in the last few years.
2. This follows from the first. Being offline, LIC would have to pay its agents who sell this plan and naturally this commission which is as high as 30% in some cases (I don’t know how much it is in this case), would come from the customer’s premium.

Suresh, I think u should have highlighted both these aspects in your article for the benefit of newcomers who are not familiar with the insurance industry.

Dinesh, LIC has launched e-term online term insurance plan recently. You can check. LIC has more than 98% claim settlement ratio and trusted one. Hence this is also considered as one of the best plans.

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Suresh KP i.e. me, have written 1800+ articles on this Blog. I love doing analysis on various Best Investment Plans like mutual funds, Stocks, IPO’s, NCD Bonds, Insurance products. If you like our blog, you can share some of the good articles on your Facebook or Twitter. This would be the BIGGEST gift which you would be giving to us.